In a major development in the ongoing US-China trade saga, President Donald Trump announced on June 11, 2025, that a trade framework with China has been finalized, including a critical agreement for Beijing to supply rare earth minerals to the United States.

This deal, described by Trump as ‘done,’ also includes provisions for Chinese students to access American universities, marking a potential thaw in the frosty relations between the two economic giants.

As trade tensions have escalated in recent months, this agreement could have far-reaching implications for industries reliant on rare earths, from technology to defense.

China’s dominance over rare earth minerals

Rare earth minerals are a group of 17 elements essential for manufacturing a wide range of high-tech products, including smartphones, electric vehicles, military equipment, and renewable energy technologies.

China dominates the global supply chain, accounting for approximately 60% of the world’s rare earth production and a significant portion of refining capacity.

This dominance has long been a point of contention, especially as the US has sought to reduce its reliance on Chinese supplies amid national security and economic concerns.

The trade war between the US and China, reignited under Trump’s administration with tariffs and export controls, has placed rare earths at the center of the conflict.

Earlier in 2025, China imposed export restrictions on these critical materials in response to US tariffs, sending shockwaves through American industries.

Details of the new trade agreement

According to Trump’s announcement on June 11, 2025, China has agreed to supply rare earths up front as part of the broader trade framework.

While specific details regarding volume, pricing, and timelines remain undisclosed, Trump emphasized that the deal is subject to final approval by both himself and Chinese President Xi Jinping.

Trump specified that the US will impose “a total of 55% tariffs” on Chinese imports, while US goods in China will face only a 10% tariff rate in return.

The 55% tariff rate may initially appear to be an increase from the 30% level agreed during last month’s trade truce, when both countries reduced previously higher tariffs.

However, according to a White House official, the 55% figure reflects the combination of three existing measures: a 10% global “reciprocal” tariff on imports, a 20% levy related to fentanyl trafficking, and a 25% tariff that was already in place on Chinese goods.

Additionally, the agreement includes a provision allowing Chinese students to attend US colleges and universities.

The US will also move to ease restrictions on advanced technology sales to China.

Calling the deal “a great WIN for both countries,” Trump said the agreement would rebalance trade relations while maintaining US leverage through sustained tariff pressure.

Implications for US industries and national security

The rare earths supply deal could provide immediate relief to US industries that have struggled with supply chain disruptions due to China’s earlier export curbs.

Sectors such as consumer electronics, automotive manufacturing (particularly electric vehicles), and defense rely heavily on these minerals.

For instance, rare earths are critical for producing magnets used in military drones and fighter jets, making this agreement a potential boost to national security.

However, questions remain about the extent to which this deal addresses the underlying issue of US dependency on China.

Critics argue that without significant investment in domestic mining and processing capabilities, the US remains vulnerable to future supply shocks.

While Trump has previously signed executive orders to encourage domestic production of rare earths, progress has been limited by environmental regulations, high costs, and the time required to establish infrastructure.

Disclaimer: Portions of this article were generated with the assistance of AI tools and reviewed by the Invezz editorial team for accuracy and adherence to our standards.

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Wells Fargo expects the US markets to have a washout in 2025 while reaching new heights in 2026.

The firm said the tariffs will cause uncertainty in the current year, while a bounce back from a highly volatile environment, backed by historical data, makes a case for high returns in 2026.

Wells Fargo Investment Institute has released its “Midyear Outlook report: Opportunities amid uneven terrain,” presenting a nuanced forecast for the U.S. equity markets. 

While 2025 is anticipated to bring a period of heightened volatility and capped gains, the institute projects a more favorable landscape with new highs in 2026. 

The outlook emphasizes building resilience in portfolios, leveraging historical recovery patterns, and carefully navigating a global economic environment shaped by evolving trade policies and corporate adaptability.

2025: A washout for gains, marked by tariffs and slowdown

Wells Fargo strategists, led by Darrell L. Cronk, President of WFII, view 2025 as a year where anticipated gains in the U.S. equity market will be significantly constrained. 

The primary culprit is the lingering uncertainty surrounding tariffs and trade-policy negotiations. 

These trade frictions are expected to present a “significant obstacle for market growth,” potentially dampening consumer purchasing power and squeezing corporate profit margins as businesses absorb increased costs. 

The ongoing uncertainty has already led some companies to pause capital allocation towards growth projects, impacting overall economic momentum.

The research firm indicates a period of economic slowdown, though not a full-blown recession, cushioned by “steady underlying support and looming tax policy extensions.” 

The economic environment, characterized by moderating job growth and real income gains, temporarily pressures consumer spending. 

The impact of “front-loaded tariffs” and potential immigration policy risks is also cited as factors that could elevate inflation and further dampen economic growth later in 2025, contributing to increased financial-market volatility.

Volatility: a precursor to opportunity

Despite the anticipated turbulence, Wells Fargo maintains an underlying belief in the market’s long-term upward trajectory. 

Their analysis highlights a historical pattern where uncertainty and volatility often create the best opportunities for investors.

Examining 10 periods before the recent past where volatility reached high levels, WFII found a median 18-month forward S&P 500 Index total return of 30%. 

This historical context underpins their recommendation for investors to “follow the lesson of history and lean into equities” even amidst current uncertainties. 

The institute suggests that without a recession, the risk of further equity-market downside beyond the lows seen in April 2025 is limited.

Corporate earnings and 2026’s brighter outlook

The trajectory of corporate earnings will be critical. 

While tariffs are expected to squeeze profit margins in 2025, forcing companies to adapt, Wells Fargo’s outlook for 2026 paints a more optimistic picture.

In terms of portfolio strategy for the balance of 2025, Wells Fargo recommends focusing on “quality allocations,” with a preference for U.S. large-cap and mid-cap equities over small-cap options. 

They also favor developed market equities over emerging markets, anticipating a “resilient dollar through 2026.” 

Investors are advised to selectively add exposure to Artificial Intelligence and consider reallocating from defensive sectors like consumer staples to more cyclical sectors such as energy, financials, communication services, and information technology when market pullbacks offer opportunities.

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US tariffs on steel and aluminum were doubled, but the metal markets appear to have quickly absorbed the impact. 

Aluminum prices on the LME have already fully rebounded to approximately $2,440 per ton after a brief dip.

“The market therefore does not currently seem to expect any major impact on the global supply situation for the raw materials affected,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a report. 

However, the consequences are more far-reaching than they appear at first glance. 

Nguyen said:

It can be assumed that the tariffs will have an impact on other segments of the metal market on the one hand and on the foreign trade policies of other nations on the other.

Demand shift

According to experts, tariffs usually lead to a shift in demand to other substitutes. 

An immediate increase in US production capacities for aluminum and steel is improbable, given their typically slow response times. Therefore, this trend is expected to be even more pronounced for these materials, according to Commerzbank. 

The US steel market is, fortunately, not excessively tight.

US steel mills demonstrated strong capacity utilisation last year, operating at 72-78% during the first eight months. This high domestic output largely met consumption needs, evidenced by imports constituting a mere 13% of apparent consumption.

USGS data indicated that US aluminium smelters operated at only 50% capacity utilisation in 2024, suggesting potential for expansion.

Even at full production capacity, only approximately 30% of consumption would be met, Nguyen noted. 

Given that secondary production, specifically the recycling of aluminum scrap, already constitutes approximately 80% of US aluminum output, the aluminum industry is poised to increasingly prioritise this sector, Commerzbank said. 

This focus is expected to further invigorate secondary production.

Secondary aluminium production

The recycling of aluminium scrap in the US is likely to have consequences for secondary production outside the US. 

According to European Aluminium, the recent dramatic acceleration of EU metal scrap exports to the US is undoubtedly linked to aluminium tariffs. 

These tariffs are causing a shift in US demand from primary to secondary aluminium.

Beyond the US, aluminum scrap prices are expected to decline in the medium to long term. 

This is largely due to the increased availability of primary aluminum. 

US companies have ceased importing primary aluminum due to prohibitive tariffs, which could make exporting to the US more appealing, Nguyen added.

Divergence in EU and US prices to continue

“One could argue that demand outside the US will likewise shift from secondary to primary production, meaning that the supply situation would remain more or less unchanged, at least from a global perspective,” Nguyen said. 

Nevertheless, this is probably unsuitable for the EU, given its commitment to boosting its domestic supply of crucial minerals and metals.

EU also aims to increase secondary production for sustainability, as it is less energy and resource-intensive than primary production.

Due to the recent US tariff increase, the introduction of restrictions on scrap metal exports is now highly probable and under consideration in the EU. 

“Restricting these exports would lead to a higher supply of scrap metal on the EU market and put pressure on prices there, which were already expected to come under pressure due to a higher supply of primary aluminium,” Nguyen said. 

The divergence in aluminium prices between the US and Europe is therefore likely to continue.

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For over a decade, the United States has used export controls to stymie China’s progress in acquiring and developing cutting-edge technologies—especially those with military applications such as advanced semiconductors and artificial intelligence.

This long-standing strategy has become a central feature of US–China economic relations, one that successive administrations have refined and intensified.

This week, senior officials from both nations met in London in an effort to manage their growing list of trade disputes.

As expected, export controls were a core topic of discussion.

“In eight years of negotiating with the Chinese, I have never had a meeting where they didn’t want to talk about export controls,” Jamieson Greer, the United States Trade Representative, said on Tuesday.

While it remains unclear whether US negotiators made any concessions in exchange for a reported easing of Chinese export restrictions on rare earth metals—a class of minerals vital to high-tech manufacturing—the foundational architecture of US export controls appears unchanged.

Use of tech controls by Trump during first presidency

President Donald Trump first began weaponizing export controls during his first term, embedding them within a broader agenda aimed at resetting America’s trade relationship with China.

Declaring that China had exploited the US for years, Trump imposed steep tariffs starting in 2018—beginning with solar panels and eventually spanning everything from aircraft to automobiles.

The first significant use of export controls under Trump came the same year, when his administration banned US companies from supplying parts to the Chinese electronics firm ZTE, citing national security concerns.

That move followed a similar action taken years earlier by the Obama administration.

Although Trump later reversed the ban in exchange for a $1 billion fine, it marked a turning point in tech trade enforcement.

A year later, the Trump administration blacklisted Huawei, barring American firms from supplying critical components to the Chinese telecommunications giant.

The action sent ripples through global tech supply chains.

Before leaving office, Trump negotiated a deal for China to purchase $200 billion worth of US exports, a commitment that China largely failed to fulfill, according to later reports.

How Biden shifted the target from firms to sectors

President Joe Biden didn’t abandon Trump’s approach but instead broadened it.

His administration aimed less at individual Chinese companies and more at curbing China’s overarching technological rise.

Under Biden, the Commerce Department issued sweeping controls, including a 2022 rule that restricted any chip manufactured using US equipment or software from being sold to Chinese customers.

Washington also urged its allies to adopt similar stances.

The Netherlands-based ASML, which produces the world’s only advanced extreme ultraviolet lithography machines essential for leading-edge chipmaking, came under pressure to stop supplying Chinese firms.

Biden’s efforts effectively turned a national policy into an international campaign.

Trump’s second term complicates the picture

Since returning to office in January, President Trump has taken steps to revise the policy structure he inherited.

One of his first moves was to rescind a rule—finalized during Biden’s final weeks—that governed the sharing of advanced AI chips with foreign countries.

While the administration has signalled that it will issue a replacement, no details have been released.

The Trump administration also appears to be increasing scrutiny on Nvidia, the leading US chipmaker whose products have become essential in AI development.

Nvidia had adjusted its chips to remain below the thresholds imposed by Biden-era controls, enabling sales to China.

In April, however, US officials imposed new licensing requirements for those chips, prompting Nvidia to announce a $5.5 billion writedown on the unsold inventory.

Additionally, the House Select Committee on the Chinese Communist Party has opened an inquiry into whether Nvidia knowingly violated export rules by supplying technology to DeepSeek, a Chinese AI start-up.

The probe signals growing bipartisan appetite for tightening the flow of sensitive technology, even to third-party buyers across Asia.

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The UK economy shrank by 0.3% in April, a sharper-than-expected decline that has raised fresh concerns about the fragility of the recovery and the growing pressure on both households and businesses.

Figures released by the Office for National Statistics (ONS) on Tuesday showed that the fall in gross domestic product (GDP) was driven by a 0.4% drop in the services sector — the largest contributor to the overall contraction.

Production output also declined by 0.6%, while construction output offered a rare bright spot with a 0.9% increase.

The latest data underscores the challenges facing Prime Minister Keir Starmer’s Labour government, which took office after a landslide election victory last summer.

The April decline marked the sharpest monthly fall in GDP since October 2023 and the worst performance since Labour came to power.

Economists surveyed by Bloomberg had predicted only a 0.1% decline in GDP for April. The larger contraction may complicate the government’s fiscal plans ahead of the autumn Budget.

Chancellor of the Exchequer Rachel Reeves told Sky News:

“We know that April was a challenging month.”

“There was a huge uncertainty about tariffs, and one of the things, if you dig into those GDP numbers today, is exports weakening and also production weakening because of that uncertainty in the world around tariffs.”

She added that the figures for April were “disappointing, but also perhaps not entirely unexpected”, given global economic uncertainty.

Source: The Guardian

Exports fall by £2 billion amid Trump tariffs, pulling growth down

A significant drag on growth came from the collapse in exports to the United States, which fell by £2 billion in April.

The ONS said this was the largest monthly drop in US-bound goods exports since records began in 1997.

The decline followed President Donald Trump’s announcement on April 2 of a blanket 10% tariff on imports from the UK, part of a wider effort to reshape global trade.

The impact was felt across several sectors, with notable declines in car shipments, non-ferrous metals, and chemical exports.

While UK officials have since negotiated a new trade agreement with the US, the tariffs still applied during April and were cited as a major factor in the economic downturn.

“After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs,” said Liz McKeown, Director of Economic Statistics at the ONS.

Tax pressures, weak demand weigh on output

Domestically, the economic landscape in April was shaped by higher energy bills, increases to payroll taxes and the national minimum wage, and an overall tightening of household finances.

Retail sales fell as consumers pulled back after stronger spending earlier in the year.

Real estate and legal services experienced a sharp drop in activity, reflecting a slowdown in home sales amid tax-related transaction changes.

The latest figures contrast sharply with the stronger-than-expected performance in the first quarter, which Labour had touted as evidence that the UK economy was turning a corner.

However, economists have warned that much of that strength was driven by temporary factors, including a rush by exporters to ship goods ahead of anticipated tariffs.

“Weaker growth is a headache for the chancellor as it makes generating the revenue government needs to support its sizable spending plans more difficult, increasing the chances of further tax rises in the autumn Budget,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales in a Bloomberg report.

Outlook dims for second quarter

The outlook for the second quarter remains muted.

Most analysts now expect growth of just 0.1% between April and June, significantly below earlier forecasts.

The fragile trajectory of the economy is further clouded by Trump’s escalating trade measures and ongoing global uncertainty.

While April’s construction growth offered a glimmer of resilience, the broader picture remains troubling for policymakers, businesses and consumers alike.

With mounting job losses and tighter financial conditions, the challenge of sustaining growth in the face of global headwinds and domestic constraints continues to loom large.

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